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A company is currently selling 200,000 parts per year. The selling price is $10 per part, with variable expenses of $6 per part. Fixed expenses
A company is currently selling 200,000 parts per year. The selling price is $10 per part, with variable expenses of $6 per part. Fixed expenses are $200,000 per year. At this volume they are currently making $600,000 in net operating income per year. Compute the break-even point in unit sales AND dollar sales. Using the information from Q9, the sales team suggests to the owner that a 10% reduction in the unit selling price will result in a 25% increase in unit volume sold. What would be the net effect on profits if they implemented the proposed changes? Show the net effect on profits. (What would happen to the company profits?) Should the owner accept the sales team recommendation
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